Nikkei in Tokyo in Bear Phase, Pension Fund Shifts Token Stock Allocation

Hiruki Nakamura
07 Jun, 2013
New York City

Stocks in Tokyo extended losses and the Nikkei declined to a two-month low. Government Pension Fund said it will increase its Japanese equities allocation by 1% to 12% and cut its bond holdings to 60%. The yen jumped close to 95 against one dollar.

[R]5:30 PM Tokyo – Stocks in Tokyo extended losses and the Nikkei declined to a two-month low. Government Pension Fund said it will increase its Japanese equities allocation by 1% to 12% and cut its bond holdings to 60%. The yen jumped close to 95 against one dollar.[/R]

Market correction in Tokyo entered bear market and the Nikkei index closed down today and dropped for the week.

The Nikkei index closed at a 2-month low after reaching a 5-year high and plunged 6.5^ in the week.

The Nikkei 225 Stock Average fell 26.49 to 12,877.53 and Topix index dropped 13.82 or 1.3% to 1,056.95. For the week, Nikkei plummeted 6.5%.

The Nikkei index is still up 24% in the year so far and in dollar the index is up 10% on the yen weakness. The recent market declines have been associated with the rise in the yen as foreign investors unwind their hedges and sell Japanese stocks.

The yen strengthened to 95.63 against one dollar in today’s trading after the pension fund said it will increase its stock allocation slightly but pare its government bond holding.

Government Pension Investment Fund, the largest retirement fund in world, said it will increase its Japanese equities allocation by 1% to 12$ but cut its domestic bond holding to 60% from 67%.

The fund also plans to increase its allocation of foreign stocks to 12% from 9% and foreign bond holdings to 11% from 9%.

The small and token increase in Japanese equities allocation disappointed the market but the cautious government agency was not expected to shift its focus dramatically.

Stocks in Review

Toyota Motor Corp dropped 160 yen to 5,480 yen and Honda Motor Co. declined 140 yen to 3,495 yen and Nissan Motor Co Ltd slumped 37 yen to 993 yen.

Toyota Motor declined after the automobile company said it will recall about 242,000 of its Prius and Lexus hybrid vehicles to fix problems in braking systems.

Sony slid 15 yen to 1,854. Canon Inc fell 85 yen to 3,185 yen and Nikon down 2 yen to 2,463 yen.

Fanuc Corp jumped 310 yen to 14,630 yen Softbank Corp slipped 60 yen to 5,040 yen.

Seven & I Holdings Co rose 10 yen to 3,305 yen. Fast Retailing Co. surged 1,640 yen or 5.6% to 31,100 yen.

Mitsubishi UFJ Financial Group fell 2 yen to 570 yen and Sumitomo Mitsui Financial Group lowered 10 yen to 4,050 yen.

Softbank Corp unit Softbank Mobile Corp. gained a net total of 298,000 new subscribers for 17th straight month in May followed by KDDI Corp with a net gain of 227,000 subscribers in May.

KDDI Corp fell 30 yen to 4,215 yen.